For long term stability, a well performing economic system should be balanced between resiliency and efficiency. Too much efficiency leads to brittleness and fragility, and too much resilience leads to stagnation.

The resiliency of a system represents the system's ability to cope with shocks as they arise while preserving its basic functions. The general state of equilibrium of an economical system is framed in terms of employment, inflation and output. A shock to the system moves the economy off its equilibrium growth path. But self-correcting markets and adjustments eventually return it to a longer-term equilibrium position in a way that maintains functionality, including supporting well-being and social justice outcomes.

To be resilient, a system needs diversity and adaptability. Local currencies increase diversity of a national economic system, and their low scale and democratic implementations ease any change in rules in case of crises, making local currencies highly adaptable.

The efficiency of a system is defined by its capacity to process volume of whatever flows through it in an organized and streamlined manner. National currencies are usually efficient, but their lack of resilience makes them prone to systemic crash (208 monetary crashes occurred worldwide between 1970 and 2010).

Numerous times, local currencies have proven their ability to maintain an economy in the event of a severe crisis. For instance, they allowed Greek citizens of the port city of Volos to face the austerity program by issuing their own local currency, the TEM.

What makes an economical system resilient?

Characteristics of a resilient local economy (Greenham, Cox and Ryan-Collins, 2013):

Responsible business: A diverse range of responsible businesses and enterprises in terms of size, model (social, private) and the goods and services produced that provide good jobs (in terms of meaningful work, progression, renumeration), respond to local demand, and support a balanced regional economy.

Positive local money and resource flows: High local multipliers in terms of spending and local investment; high resource efficiency (waste re-use/reduction).

Asset based and enabling environment: Strong local asset base in terms of attitude, skills, knowledge within the community, access to fair financial services; access and control over productive resources (physical and natural resources).

Responsive public sector: Working to strengthen and invest in the local economy, and providing good jobs; supporting investment in social as well as financial capital, which aims to address poverty and inequalities (of income, wealth, time, access and control over productive resources and carbon).

Active citizens: Local capacity to act and engage in debate and decision-making in the local and wider area (political voice); strong levels of social cohesion and shared vision for action; capability and resilience of individuals across the community; enterprising behaviours.

Interdependence: Increased understanding of economic, cultural and ecological interconnections that link communities, span the globe and impact the future; collaboration within and between communities.

Environmental sustainability: Operating within environmental limits (applied at a local and regional level).